Background
David A. Katz appealed his convictions and sentence for conspiracy to defraud the United States in violation of Section eighteen thousand three hundred seventy-one of Title eighteen of the United States Code, and for knowingly filing false Currency Transaction Reports in violation of Section thirty-one thousand five hundred twenty-four of Title thirty-one of the United States Code. The underlying facts involved Katz serving as a manager and compliance officer for Check Cash Pacific, where hundreds of Currency Transaction Reports were filed reporting millions of dollars in payroll checks cashed by a co-conspirator using fake identification and Social Security numbers between two thousand fourteen and two thousand seventeen.
The court’s reasoning
The panel affirmed the convictions, finding that a rational juror could conclude Katz agreed to defraud the United States by obstructing the Internal Revenue Service through deceitful means. The court held that the district court did not abuse its discretion in giving deliberate ignorance instructions, as evidence showed Katz cashed millions of dollars, set special rates, communicated about avoiding detection, and failed to question a co-conspirator using a different Social Security number. The court further ruled that excluding evidence of the Woodburn fraudulent document operation was proper under Federal Rule of Evidence four hundred three due to minimal probative value and risk of confusion. Additionally, the court found no abuse of discretion in refusing a spoliation instruction because the government did not know the evidence was relevant before its destruction. Finally, the court held that the Apprendi rule does not apply to restitution orders under the Mandatory Victims Restitution Act, citing binding precedent.
What it means going forward
The decision reinforces the Ninth Circuit’s application of the willful blindness doctrine in financial fraud cases and maintains the current precedent that restitution amounts determined by judges do not require jury findings under the Apprendi rule, despite ongoing judicial criticism.